Powell predicts ‘significant’ inflation drop but job market strength means more rate hikes
PBS NewsHourDec 23, 2022
The Facts
On Tuesday, US Federal Reserve (Fed) Chair Jerome Powell indicated that the Fed may increase the size of its interest rate hikes and borrowing costs to higher-than-projected levels if the economy continues to be robust amid persistently high inflation.
Speaking before the Senate Banking Committee, Powell said that the latest economic data was “stronger than expected” and that the central bank will have to do more to counter inflation.
The Spin
Pro-establishment narrative
Fed Chair Jerome Powell is doing his best to navigate a murky financial situation as the economy remains hot amid high inflation. While some may criticize him for not sticking to an exact plan, he's keeping his options open to make the best decisions as new data continues to emerge. While markets and consumers alike want security, the Fed must remain flexible to tackle an evolving financial landscape.
Establishment-critical narrative
The Fed is trying to correct its own mistakes, but it's too late. It printed an exorbitant amount of money in a very short time and pumped it into the economy at the first sign of distress. Now the Fed is trying to reverse course and tighten monetary policy too much. Central Banks are in a difficult situation of their own making, and the forecast isn’t pretty.
Metaculus Prediction
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